Another Economic Scandal Is Brewing That Trump Must Confront

Significant revisions by the BLS reduced reported job growth by nearly a million jobs for the 12 months ending March, raising concerns about the reliability of government economic statistics. The article highlights Gross Output (GO) as a superior, more comprehensive metric than GDP, as GO includes business-to-business spending and reveals the business sector is almost twice the size of consumer spending, challenging the conventional view that consumer outlays drive the economy. It criticizes the Bureau of Economic Analysis for burying GO data and delaying its release, thus obscuring a more accurate representation of economic health.

Analysis

A significant credibility issue surrounding key U.S. economic indicators has emerged following a drastic downward revision to jobs data by the Bureau of Labor Statistics (BLS). For the 12-month period ending in March, initially reported job creation figures were reduced by nearly one million, representing a cut of more than half, undermining confidence in initial government reports. The article leverages this data integrity concern to advocate for Gross Output (GO) as a superior metric to the more commonly cited Gross Domestic Product (GDP). Unlike GDP, which measures final sales, GO incorporates spending at all stages of production, including business-to-business (B2B) transactions. This methodological difference reveals that the business sector is nearly twice the size of consumer spending, directly contradicting the prevailing economic narrative that consumer outlays account for 70% of economic activity. The author posits that the Bureau of Economic Analysis (BEA) deliberately delays the release of GO data for political reasons, as its findings support pro-business policies over consumption-focused stimulus. According to the analysis presented, GO not only offers a more accurate depiction of the economy by including supply chain activity but also serves as a better predictor of future economic trends.

Key Decisions for Investors

• Investors should apply heightened scrutiny to preliminary government economic data, such as jobs reports, and factor in the potential for significant backward revisions when making allocation decisions.
• It is prudent to begin monitoring Gross Output (GO) data as a supplementary or leading indicator for economic health, as it provides a deeper view of business investment and supply chain activity not captured by GDP.
• Investment theses heavily weighted towards the narrative of a consumer-driven economy should be re-evaluated in light of data suggesting business-to-business spending is a far larger economic driver.
• Monitor political discourse for any potential shift towards prioritizing GO over GDP, as such a change could foreshadow future fiscal policy favoring business investment and deregulation, impacting sector performance.